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Morning Market Report

The market slumped following the Australian budget announcement.

The market is down nine points. The Dow Jones was down 101 points at 16,614 —  The market fell on the open and continued to slide during the day, closing near its lows in a 120 point range. There were few drivers  — wholesale prices rose the most in a year and corporate earnings were mixed — but markets are cautious considering recent record levels and important data to be released over the next few days confirming the strength of post-winter recovery and the housing sector in particular. Small caps underperformed and the weaker sectors were the consumer and financials sectors and volume was well below average.

US bonds were stronger, with the yield on the benchmark 10 year bond falling seven basis points to 2.544% due to weaker economic data.

Bank of England Report  —  Governor Mark Carney said a rate hike will depend on the slack in the economy, quashing speculation of an earlier than expected rise in rates.

European share markets were mixed  —  The UK FTSE rose 0.08%, but the German DAX was flat and the French CAC fell 0.09%.

The Aussie dollar was higher, reaching a high of US94.10c yesterday after the budget but it has eased and is currently trading at US93.77c.

Oil rose US$0.67 or 0.66% to US$102.37 a barrel.

Gold was up $11.30 or 0.86% to US$1305.90 an ounce.

Base metals were mostly stronger  —  Zinc rose 2.22%, aluminium rose 1.67% and copper rose 1.29%, but nickel fell 4.84%, moderating some of its recent strength.

Iron ore rose US$0.50 to US$103.50 a tonne.

US economic data  —  MBA Mortgage Index: Actual 3.6%, prior 5.3%, PPI: Actual 0.6%, consensus 0.2%, prior 0.5%, Core PPI: Actual 0.5%, consensus 0.2%, prior 0.6%

Global economic data  —  UK unemployment fell to 6.8% in the three months to March, the lowest since February 2009. Eurozone industrial production fell 0.3% in March and is down 0.1% yoy. In the larger EU, industrial production was down 0.2% in February but is 0.5% higher than year ago levels.

STORIES

  • Graincorp’s (GNC) – first half profit has fallen due to drought reducing grain supplies. Profit fell 43% to $50 million. The result included  $11 million worth of significant items linked to its oils division. Stripping this out, profit was still down 44% to $61 million. Revenues fell 13% to $2 billion. Fully-franked interim dividend of 15c. In Feb the company warned that underlying net profit would drop to between $80 million — $100 million.
  • Singtel (SGT) — Profit has increased by 45 to S$3.65 billion. The Optus business has increased profit by 14.6% to $835 million. Optus said their 4G network has hit 75% of Australia’s metropolitan population and the 3G coverage reached 98%. Its 4G mobile customer base reached 2.15 million up from 1.81 million.
  • Westfield Group (WDC) — First quarter update. First quarter Australia Retail Sales up 2.8% to $20.30 billion. US Specialty Retail sales up 3.1% to $US585 million. World Trade Center Project is on track for a 2015 opening.
  • Sydney Airport (SYD) — Has posted a 6.6% increase in international traffic in the month of April as they benefited from Easter falling in that month this year.
  • CBA (8089c) — Shares closed +1.2% yesterday, hitting an all time high following the bank’s third quarter trading update. Third quarter cash earnings were $2.2 billion, up from $1.9 billion a year earlier as bad debt charges fell and costs were tightly controlled. Overall the result was considered pleasing with cash earnings ahead of expectations. Credit quality was stable, with impaired assets unchanged at $3.9 billion. CBA’s interest margin was marginally lower in the quarter. The bank had a cautious tone on margins and credit growth, although it’s on track to make a record $8.7 billion annual profit.

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